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Buying A Home - Fixed Rate or Adjustable Loan
Interest Rates are really low right now, and we've been talking about 30 and 15 year Fixed Rate Loans. If you look at the different loan programs that lenders are offering, you will also hear about Adjustable Rate Loans.  Adjustable Rate Loans typically have a lower rate than the fixed rate initially and can look really attractive (and can help you afford a more expensive house).  Sounds like a great deal, but you need to really look at the total picture before getting into an adjustabel rate loan.
The FIXED RATE LOAN is based on what the current rate is and your loan repayment amount is set at the same amount for the life of the loan (most commonly 15 year or 30 year repayment).  The payment includes an amount that pays down the principal (the amount you borrowed) and the interest that accrued on that principal balance. The more payments you make, the less you owe on the loan so each month the amount you apply to principal increases and the amount you pay in interest decreases. But the PAYMENT remains the same. Usually added to your monthly payment is an amount for taxes and insurance which can go up each ... more

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